Saturday, January 9, 2010

"Building a robust clean-energy sector is how we will create the jobs of the future — jobs that pay well and can't be outsourced," President Obama said Friday.

Yes, but getting these jobs is burning a hole in the national wallet. The problem is that even advocates like Obama concede that these programs are not very cost-effective in creating jobs.

Obama says the grants will create 17,000 cleantech jobs. Well, get out your calculator. $2.3 billion for 17,000 jobs equals $135,294 per job. (And that’s not including the eventual interest on this deficit spending). Those green jobs had better pay well over six figures to justify that expense.

The AP Reports: "The money will go to projects including solar, wind and energy management."

Other countries have tried to use energy policy to produce jobs. Germany is often cited as an example of how government policy can drive the adoption of renewable energy and produce scads of green jobs. For example, in his opening statement at a May 2009 climate change hearing, Sen. Kerry praised Germany for putting “in place strong policy mechanisms to drive investment in solar power and other renewable energy sources. As a result, renewable energy usage has tripled to 16 percent, creating 1.7 million jobs. By 2020, Germany's clean energy sector will be the biggest contributor to the nation's economy.”

However, a study released in October finds that the German green job miracle is largely a mirage, and an expensive mirage at that. The report, published by the nonprofit German think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), notes that as a result of the German government's energy policies, Germany leads the world in solar panel installation and is second only to the U.S. in wind power generation. Great, right? Actually terrible, says the report. Let me quote some of the report’s sobering conclusions at length:

While employment projections in the renewable sector convey seemingly impressive prospects for gross job growth, they typically obscure the broader implications for economic welfare by omitting any accounting of off-setting impacts. These impacts include, but are not limited to, job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers’ overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.

Proponents of renewable energies often regard the requirement for more workers to produce a given amount of energy as a benefit, failing to recognize that this lowers the output potential of the economy and is hence counterproductive to net job creation. Significant research shows that initial employment benefits from renewable policies soon turn negative as additional costs are incurred. Trade and other assumptions in those studies claiming positive employment turn out to be unsupportable.

In the end, Germany’s PV promotion has become a subsidization regime that, on a per-worker basis, has reached a level that far exceeds average wages, with per worker subsidies as high as 175,000 € (US $ 240,000). …

Although Germany’s promotion of renewable energies is commonly portrayed in the media as setting a “shining example in providing a harvest for the world” (The Guardian 2007), we would instead regard the country’s experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits.

So-called "green jobs" appear to be little more than big government patronage positions. I think the reason that they're popular in Congress is because the jobs destroyed by them are hard to see while the jobs created are easily tallied.

One local bakery (McArthur's Bakery) has taken a firm stand against the green jobs myth. Randy and David McArthur would have to raise their prices as a result of the increased energy and raw material costs forced on their business by the Cap and Trade bill (H.R. 2454). Higher prices will reduce demand and likely lead to layoffs. Other small businesses need to explain the impact that these green policies will have on them.